Ares Capital yesterday reported a big quarter for new issues, $2.4 billion across 50 borrowers, compared to $1.3 billion in the previous quarter and $1.9 billion in the same period last year.
Average new issue yields in the quarter slipped to 9.8% from 10.4%. Lower LIBOR drove the decline, but so did structuring, with 90% of new issues concentrated in first-lien loans compared to 50% in the second quarter. Much of the first-lien volume was driven by add-on acquisition activity among existing borrowers.
Non-accruals fell to 1.5% from 2.3%, as Ares wrote down Trident Health Services to realize a loss of $96 million. Taking away some of the sting was about $47 million in gains realized among other companies, including the sale of Soil Safe during the quarter. No new non-accruals were added during the quarter.
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